* SP says ramifications of social tensions could
deteriorate
* Treasury insists spending plans realistic and achievable
JOHANNESBURG Oct 12 (Reuters) – Standard Poor’s cut South
Africa’s credit rating one notch on Friday to BBB with a
negative outlook, saying mining strikes and social tensions
could reduce fiscal flexibility and hurt growth in the
continent’s biggest economy.
The Treasury hit back, saying its spending plans were
“realistic and achievable” and that there was no historical
evidence from the 18 years since the end of apartheid to support
SP’s assertions.
“Our young democracy has seen several elections within the
ruling party and government. None of these have impacted policy
and budgeting in the manner that SP suggests,” it said in a
statement.
“Government will continue to invest in infrastructure with
the view of enhancing the productive capacity of our economy and
the competitiveness of our industries. This will be done in a
manner consistent with fiscal sustainability.”
The rand, which fell to a 3-1/2 year low on Monday
amid concerns about the impact to growth of mining and trucker
strikes, shed nearly one percent against the dollar after the
SP cut.
It was trading at 8.75 at 1737 GMT, from 8.65 just before
the announcement.
SP’s downgrade from BBB-plus takes it one notch below both
Moody’s Investors Service’s Baa1 rating with a negative outlook
as well as Fitch Ratings’ BBB-plus rating, also with a negative
outlook.
Continued…
